'Disregarded earnings' for unemployment insurance may rise


Lawmakers are considering letting Vermonters keep more money they earn from part-time work while they collect unemployment insurance benefits.

House Commerce Chair Bill Botzow, D-Bennington, said Wednesday afternoon that his committee has "great interest" in increasing the "earnings disregard" - the amount of earnings kept out of calculations that set a worker's unemployment benefits.

The goal is to encourage unemployed people to find work. Currently, some people experience a steep cut in benefits when they start earning their own money, sometimes even ending up in worse financial shape.

Right now, benefits are reduced dollar-for-dollar for earnings beyond 30 percent of the weekly benefits. Rep. Dave Sharpe, D-Bristol, proposed reducing the threshold to 20 percent, then only docking benefits by 60 cents for every dollar.

The calculations prove complicated, and the House Committee on Commerce and Community Development is now working with Department of Labor staff to figure out the optimal threshold and percentage for disregarded earnings.

Whatever the final formula, he said, he wants to fix what he says is a structure that discourages people from working an extra shift or earning an extra dollar.

The language from Sharpe's bill was moved into H.646, which originally contained a raft of other provisions related to unemployment.

The earnings disregard related to unemployment insurance stands a healthy chance, Botzow said.

The financial impact is not yet known, because the committee has not yet settled on the size of the change they'd like to see.

While Botzow and many committee members support the goal of fixing the formula to better encourage re-employment, he summarized the tricky spot they're in as they manage the Unemployment Insurance Trust Fund from which benefits are paid.

"The UI Trust Fund has to be able to withstand the blows of economic change," Botzow said.

It's recovered well from the 2008 economic collapse, even repaying a federal loan early after borrowing $77.7 million for a bailout.

"Right now, we're positive, around $75 million. But we know the desirable number is more than $200 million," Botzow said.


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